Malaysia sees slower investments

KUALA LUMPUR: Malaysia is expecting a sluggish year in total investments as global businesses continue to navigate headwinds and uncertainty.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed is projecting that the country’s services and manufacturing sectors, which pulled through a stormy 2016 to chart modest growth in investments and projects, could see up to a RM2bil to RM3bil decrease in overall investments this year. Total approved investments in Malaysia rose 11% to RM207.9bil in 2016 from RM186.7bil the year before.

A total of RM58.5bil went to manufacturing projects, while RM77.1bil went to service sector projects, excluding investments in real estate.

Mustapa said the Malaysian Investment Development Authority (Mida) was expecting a decreased approved investment target for both sectors in 2017, with RM55bil for manufacturing and RM75bil for services.

Malaysia’s outlook continues to be uncertain, given the increasing protectionist sentiment of several countries, but he said the country was already off to a good start following a massive RM31bil investment from Saudi Arabia’s Aramco in the Refinery and Petrochemical Integrated Development project in Pengerang, Johor.

“There will be ups and downs. Gone are the days of double-digit growth. I don’t think we will see that as we continue to develop. But we are looking for modest growth.

“This year, we hope to grow a bit more and see more iconic and quality investments…we are going to be more aggressive. We will be engaging companies more aggressively to understand what the issues are and how to resolve them,” he told an audience at the Mida annual media conference yesterday.

Investments last year funded 4,972 projects and created 153,060 jobs overall.

Though the number of projects had slightly increased from 2015, Mustapa noted that there was a 15% decrease in job creation.

The manufacturing sector last year saw a reduction in investments to RM58.5bil from RM74.7bil in 2015, though Mustapa noted that the higher amount of investments last year was primarily attributed to two major projects approved then, namely, the Petronas Refinery and Petrochemical Corp project in Johor and the LNG9 project in Sarawak worth RM35.3bil.

Johor received the largest amount of manufacturing investments, followed by Selangor, Sarawak, Penang and Perak.

A significant portion of approved investments was in capital-intensive projects, said Mida, which added that it is expected to produce a “multiplier effect” which can benefit job creation, research and development, skills, local sourcing and the generation of foreign-exchange earnings.

While the value of domestic investments dropped 41% to RM31.1bil, foreign investments shot up 25.1% to RM27.4bil. China was the biggest foreign investor in manufacturing.

In the services sector, Malaysia recorded a 23.3% growth year-on-year.

Real estate continues to lead with RM64.1bil of investments, though key sub-sectors with relatively high value-added activities like global establishments, financial services, information technology and telecommunications and support services also recorded growth, Mustapa said.

The United States was the biggest foreign investor in the services sector last year, followed by Hong Kong, Japan, Singapore and the Netherlands.

The primary sector saw an increase of 116.7% to RM8.2bil, with significant investment growth in the mining, plantation and commodities and agriculture sub-sectors.

Asked how trade tensions between China and the US could affect Malaysia’s interests, Mustapa said geopolitics between the two superpowers could cause a negative impact.

“Hopefully, part of what they are saying is just rhetoric. They have had high-powered meetings and from what I hear, it is mostly good. So, hopefully, quite a bit of it is just rhetoric or there will be potential risks,” he said.

Moving forward, Malaysia has RM35.3bil in investments in the pipeline this year to expand the chemicals and chemical products, electrical and electronics, machinery and metal sub-sectors in manufacturing and the global establishments, healthcare, education and hospitality sub-sectors in services.

Source: http://www.thestar.com.my/business/business-news/2017/03/03/malaysia-sees-slower-investments/#SdTc0YJ5JV7KCrIj.99